Qualcomm's Stock Slides Amid Challenging Market Conditions... Adopts Conservative Approach for the Time Being

[Asia Economy Reporter Minji Lee] Qualcomm's stock price is sliding down a slippery slope. This is due to lowered earnings expectations amid a sharp decline in demand for premium smartphones.

Looking at Qualcomm's stock price on the 6th, it shows 106.69, down 9.68% over the past week. Investor sentiment sharply contracted after the company announced guidance below market expectations following its earnings release.

In the fourth quarter (fiscal year basis), Qualcomm's revenue was $11.4 billion, and operating profit was $4.3 billion, up 22.2% and 25.1% respectively compared to the same period last year. Revenue and operating profit were 0.1% and 0.4% below market expectations, respectively. EPS (earnings per share) exceeded market expectations by 0.6%.

By segment, the QCT (semiconductor and hardware division) revenue was $9.9 billion, up 28.1% year-over-year, while the QTL (technology licensing division) revenue was $1.4 billion, down 7.5% year-over-year. Within the QCT division, handset revenue was $6.6 billion, IoT $1.9 billion, automotive $0.4 billion, growing 40.2%, 24.4%, and 58.2% respectively, while RF revenue was $1.0 billion, down 19.8%.

Jaegu Kang, a researcher at Hanwha Investment & Securities, explained, “The handset segment benefited from strong Snapdragon chip demand,” and added, “The RF communication segment was negatively affected by the overall weak handset market and inventory adjustments by customers.”

Although the fourth-quarter results were solid, the first-quarter guidance failed to meet market expectations. The company’s first-quarter revenue guidance was estimated at $9.2 to $10.0 billion, a 12-19% decrease from the previous quarter. Considering the market expectation was $12.0 billion, this is a significant shortfall. Qualcomm’s main business is handsets, but inventory adjustments by customers, which had been limited to mid-to-low-end smartphones, have now started to spread to premium smartphones. The downward revision was based on expected weak demand across all smartphone segments.

While it is unlikely to avoid weak earnings in the near term, there are positive signs. The current distribution inventory is at the level of 8 to 10 weeks, which the company mentioned could be cleared during the next quarter. Additionally, with Samsung Electronics expected to launch new products starting from the third quarter of next year, gradual recovery is anticipated. Yuak Park, a researcher at Kiwoom Securities, analyzed, “Although customers’ inventory policies are tightening due to economic downturn, once this passes, a market recovery linked to new product launch cycles is expected.”

Youngho Ryu, a researcher at Mirae Asset Securities, said, “Although handset market growth will be difficult next year, the company’s handset business focused on the high-end segment and its diversified revenue structure are differentiating factors compared to competitors.”

This content was produced with the assistance of AI translation services.